Metro officials want permission to borrow $220?million to cover a loan coming due in October, as the transit agency continues struggling under restrictions imposed last year after a federal audit found numerous instances of financial mismanagement.

At a time when some Washington-area officials have become increasingly skeptical of the way the Washington Metropolitan Area Transit Authority handles its money, the agency’s chief financial officer plans to ask Metro’s board of directors on Thursday to allow him to seek the short-term loan.

Metro already is juggling several large, short-term loans, borrowed largely to make up for federal grant money that has been slow in arriving. The Federal Transit Administration, which completed the audit in March 2014, has been limiting Metro’s access to grant money until the agency fixes the problems described in the scathing financial report.

Tuesday, D.C. Council Chairman Phil Mendelson (D) called a meeting between Metro board leaders and D.C. Council members in his office to relay concerns about how the transit agency’s financial troubles are being handled. And Wednesday, council member Elissa Silverman (I-At Large) hammered Metro leaders at a public oversight hearing, accusing the board of failing to hold individuals accountable for its financial lapses or to provide a “clear picture” of the agency’s financial state.

“It’s an incredible lack of management for such an important public agency. Yet no one seems to be held accountable for it,” said Silverman, a member of the council’s finance and revenue committee. She also described Metro as an agency “lurching from crisis to crisis.”

High Collateral Quality: The trust collateral consists of 100% Federal Family Education Loan Program (FFELP) loans, including approximately 12% rehabilitated (rehab) FFELP loans. The credit quality of the trust collateral is high, in Fitch’s opinion, based on the guarantees provided by the transaction’s eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. The current U.S. sovereign rating is ‘AAA’ with a Stable Outlook.

Sufficient Credit Enhancement (CE): While both the senior and subordinate notes will benefit from overcollateralization (OC) and future excess spread, the senior notes also benefit from subordination provided by the class B note. As of December 2014, total parity is 100.93% (0.92% CE) and senior parity is 103.96% (3.81% CE). Cash will be released from the trust given that the specified OC amount (the greater of 1.54% of the adjusted pool balance or $5.8 million) is maintained.

Adequate Liquidity Support: Liquidity support for note is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of pool balance and $837,743.

Acceptable Servicing Capabilities: Pennsylvania Higher Education Assistance Agency as servicer, will be responsible for servicing the portfolio. Fitch has reviewed the servicing operations of Pennsylvania Higher Education Assistance Agency and believes it to be acceptable servicer of FFELP student loans.

RATING SENSITIVITIES

Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, ‘AAAsf’ FFELP ABS ratings will likely move in tandem with the ‘AAA’ U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch’s published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

A comparison of the transaction’s representations, warranties, and enforcement mechanisms (RW&Es) to those of typical RW&Es for FFELP asset-backed securities is available in the presale appendix. This presale appendix and Fitch’s special report on ‘Representations, Warranties, and Enforcement Mechanisms on Global Structured Finance Transactions,’ may be accessed via the links provided below.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

BACOLOD CITY—The Department of Social Welfare and Development (DSWD) is conducting an inventory of its propoor cash transfer scheme program after 259 beneficiaries in Negros Occidental province were found to have pawned their cash cards.

Dionela Flores-Madrona, head of provincial operations of the Pantawid Pamilyang Pilipino Program (4Ps), or the conditional cash transfer scheme, said the move would ensure that the cards are still with beneficiaries and not with loan sharks.

The program is aimed at helping the poorest of the poor by giving them monthly stipends, provided they bring their children to health centers, send them to school, and attend family development sessions.

Madrona said the 259 had pawned their cards to usurers for P500 to P1,000 each. The most common reason given by the beneficiaries is that they needed money urgently for the hospital expenses of relatives.

At least 96 were found to have pawned their cash cards in Bacolod, 66 in Cadiz City, 51 in Escalante City, 19 in San Carlos City, 10 in Talisay City, 14 in Hinigaran town, two in Silay City, and one in Toboso town.

The irregularity was discovered in December last year after the DSWD verified a tip that several beneficiaries had pawned their cards—actually, automated teller machine cards of Land Bank of the Philippines—through which 4Ps beneficiaries get their cash allocations.

Loan sharks collect payment by withdrawing the money meant for the beneficiaries.

Cash assistance to 4Ps beneficiaries is released every two months. The amount per family ranges from P600 to P2,800, depending on the number of children a beneficiary has.

In Negros Occidental, including Bacolod, there are 126,667 4Ps beneficiaries.

Those caught misusing their cards are made to sign a notice of warning from the DSWD and given counseling by a social worker.

They would not also receive their cash assistance for the month, but would not yet be removed from the program. Those committing the offense for the third time would be permanently delisted.

Madrona said the DSWD could not sue the loan sharks in the absence of a law penalizing them.

But the agency could confiscate the cash cards, which are government property, she said.

WASHINGTON (AP)—Troubled by consumer complaints and loopholes in state laws, federal regulators are putting together the first-ever rules on payday loans aimed at helping cash-strapped borrowers avoid falling into a cycle of high-rate debt.

The Consumer Financial Protection Bureau says state laws governing the $46 billion payday lending industry often fall short, and that fuller disclosures of the interest and fees—often an annual percentage rate of 300 percent or more—may be needed.

Full details of the proposed rules, expected early this year, would mark the first time the agency has used the authority it was given under the 2010 Dodd-Frank law to regulate payday loans. In recent months, it has tried to step up enforcement, including a $10 million settlement with ACE Cash Express after accusing the payday lender of harassing borrowers to collect debts and take out multiple loans.

A payday loan, or a cash advance, is generally $500 or less. Borrowers provide a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 per $100 borrowed. Interest-only payments, sometimes referred to as “rollovers,” are common.

WASHINGTON — Troubled by consumer complaints and loopholes in state laws, federal regulators are putting together the first rules on payday loans aimed at helping cash-strapped borrowers avoid falling into a cycle of high-rate debt.

The Consumer Financial Protection Bureau said state laws governing the $46 billion payday lending industry often fall short and that fuller disclosures of the interest and fees — often an annual percentage rate of 300 percent or more — may be needed.

Details of the proposed rules, expected early this year, would mark the first time the agency has used the authority it was given under the 2010 Dodd-Frank law to regulate payday loans. In recent months, it has tried to step up enforcement, including a $10 million settlement with ACE Cash Express, accusing the payday lender of harassing borrowers to collect debts and take out multiple loans.

A payday loan, or a cash advance, is generally $500 or less. Borrowers provide a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 per $100 borrowed. Interest-only payments, sometimes referred to as “rollovers,” are common.

Legislators in Ohio, Louisiana and South Dakota unsuccessfully tried to broadly restrict the high-cost loans in recent months. According to the Consumer Federation of America, 32 states now permit payday loans at triple-digit interest rates, or with no rate cap.

“Our research has found that what is supposed to be a short-term emergency loan can turn into a long-term and expensive debt trap,” said David Silberman, the bureau’s associate director for research, markets and regulation.

The agency is considering options that include establishing tighter rules to ensure a consumer has the ability to repay. That could mean requiring credit checks, placing caps on the number of times a borrower can draw credit or finding ways to encourage states or lenders to lower rates.

Payday lenders say they fill a vital need for people who hit a rough financial patch. They want a more equal playing field of rules for both nonbanks and banks, including the way the annual percentage rate is figured.

“We offer a service that, if managed correctly, can be very helpful to a diminished middle class,” said Dennis Shaul, chief executive of the Community Financial Services Association of America, which represents payday lenders.

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WASHINGTON (AP) — Troubled by consumer complaints and loopholes in state laws, federal regulators are putting together the first-ever rules on payday loans aimed at helping cash-strapped borrowers avoid falling into a cycle of high-rate debt.

The Consumer Financial Protection Bureau says state laws governing the $46 billion payday lending industry often fall short, and that fuller disclosures of the interest and fees — often an annual percentage rate of 300 percent or more — may be needed.

Full details of the proposed rules, expected early this year, would mark the first time the agency has used the authority it was given under the 2010 Dodd-Frank law to regulate payday loans. In recent months, it has tried to step up enforcement, including a $10 million settlement with ACE Cash Express after accusing the payday lender of harassing borrowers to collect debts and take out multiple loans.

A payday loan, or a cash advance, is generally $500 or less. Borrowers provide a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 per $100 borrowed. Interest-only payments, sometimes referred to as “rollovers,” are common.

Legislators in Ohio, Louisiana and South Dakota unsuccessfully tried to broadly restrict the high-cost loans in recent months. According to the Consumer Federation of America, 32 states now permit payday loans at triple-digit interest rates, or with no rate cap at all.

The CFPB isn’t allowed under the law to cap interest rates, but it can deem industry practices unfair, deceptive or abusive to consumers.

“Our research has found that what is supposed to be a short-term emergency loan can turn into a long-term and expensive debt trap,” said David Silberman, the bureau’s associate director for research, markets and regulation. The bureau found more than 80 percent of payday loans are rolled over or followed by another loan within 14 days; half of all payday loans are in a sequence at least 10 loans long.

The agency is considering options that include establishing tighter rules to ensure a consumer has the ability to repay. That could mean requiring credit checks, placing caps on the number of times a borrower can draw credit or finding ways to encourage states or lenders to lower rates.

Payday lenders say they fill a vital need for people who hit a rough financial patch. They want a more equal playing field of rules for both nonbanks and banks, including the way the annual percentage rate is figured.

“We offer a service that, if managed correctly, can be very helpful to a diminished middle class,” said Dennis Shaul, chief executive of the Community Financial Services Association of America, which represents payday lenders.

Maranda Brooks, 40, a records coordinator at a Cleveland college, says she took out a $500 loan through her bank to help pay an electricity bill. With “no threat of loan sharks coming to my house, breaking kneecaps,” she joked, Brooks agreed to the $50 fee.

Two weeks later, Brooks says she was surprised to see the full $550 deducted from her usual $800 paycheck. To cover expenses for herself and four children, she took out another loan, in a debt cycle that lasted nearly a year.

“It was a nightmare of going around and around,” said Brooks, who believes that lenders could do more to help borrowers understand the fees or offer lower-cost installment payments.

Last June, the Ohio Supreme Court upheld a legal maneuver used by payday lenders to skirt a 2008 law that capped the payday loan interest rate at 28 percent annually. By comparison, annual percentage rates on credit cards can range from about 12 percent to 30 percent.

Members of Congress also are looking at payday loans.

Sen. Sherrod Brown of Ohio, the top Democrat on the Senate Banking, Housing and Urban Affairs Committee, plans legislation that would allow Americans to receive an early refund of a portion of their earned income tax credit as an alternative to a payday loan.

Sen. Elizabeth Warren, D-Mass., wants the U.S. Postal Service to offer check-cashing and low-cost small loans. The idea is opposed by many banks and seems unlikely to advance in a Republican-controlled Congress.

Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to the Hyatt Hotel Portfolio Trust 2015-HYT transaction (see ratings list below). Hyatt Hotel Portfolio Trust 2015-HYT is a CMBS single borrower transaction that is collateralized by a $340.0 million floating rate loan that was originated by JPMorgan Chase Bank, National Association and an affiliate of Goldman Sachs Mortgage Company. The loan has an initial two year term with three, one-year extension options. Proceeds from the mortgage loan, along with $167.0 million of mezzanine financing, $117.7 million of cash equity and a $19.0 million letter of credit contributed by the loan sponsor, were used to facilitate the acquisition of a portfolio of 38 hospitality assets.

The loan is secured by the borrower’s fee simple interests in 35 lodging properties totaling 4,530 keys, as well as the leasehold interest in three assets totaling 420 keys. Twenty-seven of the properties are select-service hotels operated under the Hyatt Place flag. These assets were built between 1990 and 2013, and range in size from 79 to 162 keys. The remaining 11 assets are extended-stay hotels operated under the Hyatt House flag. These assets were built between 1997 and 2010. All of the properties in the portfolio have been renovated since 2007, and a total of $41.0 million ($8,277 per key) has been spent on capital improvements across the portfolio from 2007 to 2014. Over 95% of the collateral properties by ALA are located in markets considered to be primary or secondary by KBRA. The primary market exposure (19.9%) includes two of the ten largest properties by ALA which equates to 9.4% of the portfolio balance. In addition, one of the portfolio’s five largest MSA concentrations is in a primary market, Boston (4.9%).

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flows using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower & Large Loan Rating Methodology. For the purposes of our analysis, we determined KBRA net cash flow (KNCF) for each asset, and applied KBRA capitalization rates to each property’s KNCF to determine property value. KBRA adjusted this value to give partial credit in the amount of $30.0 million for a capital improvement reserve that was funded at origination. The weighted average variance to the issuer’s NCF was 2.4%, and the weighted average value variance to each property’s third party appraisal values was 34.0%. The analysis produced an aggregate KBRA value of $371.3 million and an in- trust KLTV of 91.6%.

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Hyatt Hotel Portfolio Trust 2015-HYT 17g-7 Disclosure Report.

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

The top testimonial for payday loan company Smart Pig is from someone without a surname, who declares in block capitals: “I love you Smart-Pig.com! You are my favourite pig ever! Who needs Peppa when you’re in my life!”

“Noor” has clearly only met pigs willing to give her a 782% representative APR loan, a full 1% worse than the offer from Smart Pig.

Smart Pig is just one of a number of high interest payday lenders now offering their services to students. Their adverts, which have been reported to the Advertising Standards Agency (ASA), highlight prizes you can get your hands on, including the opportunity to “win a term’s rent”. All in a space they could have used to explain their APR.

Targeting Students

A worrying number of undergraduates are turning to payday loans. Around 2% of undergraduates used them last year, according to a survey by the National Union of Students (NUS). This may not sound like a lot, until you consider this means up to 46,000 students are risking the debt spiral associated with payday loans.

Peachy Loans have recently had complaints upheld against them by the ASA for an advert they ran on sandwich wrappers in cafes opposite university campuses and colleges. The campaign, it was found, encouraged a casual attitude to taking out a loan. Its slogan was: “Small bites put a smile on your lips! You can now get a loan from £50 to £500 and pay it back in small bits…” emanating from a cartoon mouth.

People willing to take financial advice from their sandwich wrappers may seem like a financially unsound group unlikely to return your investment but, unfortunately, these are probably the same group of well-meaning but naïve people that will incur late fees.

Scam techniques

There’s a reason payday loans companies use such trite campaigns, and it’s the same reason email scams are so poorly written. You and I may realise the emails are obviously a scam, but that’s because we’re supposed to.

Scammers deliberately use terrible spelling and implausible stories because it weeds out “false positives”, according to research from Microsoft. These are people who will likely figure out it’s a scam before they send off their money.

In the same way, adverts for payday loans weed out the people they’re not interested in, until all they’re left with are the incredibly desperate or the young and unreasonably optimistic.

There is money to be gained from the people optimistic enough to think APR won’t apply to them, as implied by Wonga’s now banned advert which claimed their 5,853% APR was “irrelevant”.

Payday loan companies aren’t looking to attract people who might look up what their interest rate actually means. They’re looking for more vulnerable people.

People who look at smiling pigs with top hats carrying bags of cash and don’t see a monumentally large danger sign. People who are paying attention to the singing Austrian girls handing people wads of money in TV adverts, and not the alarming text at the bottom of the screen.

Or they’re looking for people far too desperate to care. All too often students fit into this latter category.

Other options are available

Student Money Saver’s advice is to go to your university or student union for financial help. No matter how desperate things seem, advice and financial help will be available.

Hardship funds are available to you from your university when you are in dire financial circumstances. Hardship funds are lump sums or installments paid to you when you can’t afford the essentials, such as rent payment, utility bills or food.

Usually these are lump sums or installments paid to you, which you won’t have to pay back. In some cases your university will give you money as a loan, but without the massive rates of interest offered by payday lenders. Talk to your university and they will help you.

You can also request a higher bank overdraft if you haven’t done so already. Banks know students are likely to be high earners when they graduate, and so are likely to allow you this extension as an investment in your loyalty. If one bank won’t offer you an extended overdraft, shop around for a bank that will.

Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to five classes of the BAMLL 2014-FL1 securitization, a $432.6 million large loan floating rate CMBS transaction (see ratings listed below).

Two of the loans have been participated into senior pooled and subordinate non-pooled participations, both of which will be contributed to the trust. Proceeds received in connection with the senior participations and the non-participated loans will be used to make distributions on the pooled certificates and each of the non-pooled subordinate participations serves as the sole source of cash flow for a loan-specific class of certificates. Unless otherwise indicated, all percentage references reflect the aggregate in-trust balance of both the pooled and non-pooled components.

The trust assets consist of Lynnhaven Mall (54.3%), PGA National Resort & Spa (22.2%), Warner Center Marriott (11.9%) and Estancia La Jolla Hotel & Spa (11.6%). Each mortgage loan is secured by a single property. The related borrowers have a fee simple interests in three collateral properties (88.4%) and leasehold interest in one property, Estancia La Jolla Hotel & Spa (11.6%). The properties are located in three states, Virginia (54.3%, 1 property), California (23.5%, 2) and Florida (22.2%, 1). The pool has exposure to two property types, retail (54.3%) and lodging (45.7%), and the lodging exposure is comprised of two resort properties (33.8%) and one full service hotel (11.9%).

KBRA’s analysis of the transaction involved a detailed evaluation of the underlying cash flows using our CMBS Property Evaluation Guidelines and the application of our CMBS Single-Borrower & Large Loan Rating Methodology. The results of the analysis yielded a KNCF for the underlying collateral properties that was, on average, 2.5% less than the issuer cash flow. KBRA applied our stressed capitalization rates to the KNCF to arrive at valuations of the underlying properties. The KBRA values were, on average, 30.4% less than the appraiser’s valuation. The resulting KBRA loan to value (KLTV) was 85.7% for the pooled loans and 88.8% for the total in-trust balance. The financing for three of the properties (45.7%) also includes $89.9 million of debt held outside the trust in the form of $44.9 million of mezzanine debt, a $23.0 million subordinate B-note, and $22.0 million of preferred equity. Inclusive of this additional debt, the weighted average all-in KLTV was 106.5%. As part of our analysis, we also reviewed and considered third party engineering and environmental reports, our analysts’ site visits to the collateral properties, and the loan and securitization structures.

For complete details on the analysis, please see our presale report, BAMLL 2014-FL1 published today at www.kbra.com. The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

The loan must be fixed rate, and the home must be a borrower’s primary residence, so this would not apply to investors, according to FHFA officials on a conference call with reporters Monday morning. At Fannie Mae, at least one of the borrowers on the loan must be a first-time homebuyer, defined as not having owned a home in the past three years. Freddie Mac is allowing the low down payment loan for any borrower who meets its underwriting standards.

Full documentation of a borrower’s income and credit history is required, as is mortgage insurance. Freddie Mac will require credit counseling for its borrowers, while Fannie Mae will in certain cases.

Fannie Mae has a 3 percent down payment product already through state housing finance agencies, but this loan may go through any lender interested in the program. At a conference in November, Bank of America CEO Brian Moynihan said his bank would not participate in a low down payment program and reportedly suggested that if borrowers didn’t have 10 percent to put down, they should probably rent. That was before these details were announced.

“[Mr. Moynihan] made those comments several weeks ago as a broad characterization,” said Bank of America spokesman Terry Francisco on Monday. “We will evaluate this program.”

Fannie Mae, which is significantly larger than Freddie Mac, will also offer a cash-out refinance through the program, but only on existing Fannie Mae loans, and the amount of the cash out is limited to the lesser of 2 percent of the loan or $2,000. It is designed to help cover closing costs only. Freddie Mac is offering a no cash-out refinance.

Fannie Mae’s minimum FICO credit score cutoff is 620, while Freddie Mac’s is 660, but both are subject to so-called, compensating factors, so if a borrower has a credit score on the low side, he or she may need to show more assets to mitigate the added risk.

The move to offer these low down payment loans is clearly in response to an industry cry that credit is too tight and stifling demand from first-time homebuyers. These buyers, usually up to 40 percent of the homebuying market, have been stuck at less than a third of today’s market. Income growth has not been keeping pace with rising home prices, and as rents continue to rise, potential buyers are having a much tougher time saving for a large down payment.